World Of Global Value Chains Research Articles

Ioannis Kampourakis, Review of Stefano Ponte, Business, Power and Sustainability in a World of Global Value Chains

Ioannis Kampourakis, Review of Stefano Ponte, Business, Power and Sustainability in a World of Global Value Chains

From Sustainable Global Value Chains to Circular Economy-Different Silos, Different Perspectives, but Many Opportunities to Build Bridges.

A growing interest in the circular economy concept has pushed the discourse in various management-related disciplines beyond established boundaries, with calls to better address how such a model may be developed in a world of global value chains. Still, the conventional linear economy model continues to dominate business, society, and research. While the concept of better connecting physical output and input flows at multiple production or consumption levels is becoming more accepted, it remains unclear how to make this happen while ensuring that sustainability targets are met or exceeded. Multiple scientific communities contribute different perspectives to this discourse, with promising opportunities for research. Circular economy and sustainability from business and economics perspectives are multifaceted. The existing body of knowledge needs to be advanced to assist private individuals, business managers, investors, or policymakers in making informed decisions. In this article for the inaugural issue, we provide a snapshot of the discourses among those who have studied the circular economy and its related topics. We outline conceptual inroads and potential research questions to encourage further circular economy and sustainability research and discourse from business or economics perspectives as well as from the broader transdisciplinary angle. We propose three research pathways: (1) connecting output with input needs in a global circular economy; (2) beyond today’s business logic for a global circular economy; and (3) inclusion of the Global South in North-dominated circular economies. For each, we propose concepts, theories, or methodological approaches and offer various perspectives from the micro, macro, and meso levels.

Review of Business, Power and Sustainability in a World of Global Value Chains by Stefano Ponte

Review of Business, Power and Sustainability in a World of Global Value Chains by Stefano Ponte

Reimagining Contract in a World of Global Value Chains

Reimagining Contract in a World of Global Value Chains

EU-UK Global Value Chain Trade and the Indirect Costs of Brexit

Production networks in the European Union (EU) and the United Kingdom (UK) are highly integrated and Brexit poses a threat to supply and demand linkages across the Channel. In a world of Global Value Chains (GVCs), tariffs might be more harmful than in a world where trade is purely direct. In this paper we highlight the features of GVC-trade between the EU and the UK, disentangling the complex network of bilateral EU-UK value-added flows. Assuming that following Brexit the UK adopts the same Most-Favoured-Nation tariff schedule as the EU, we compute the direct and indirect costs of these tariffs, taking into account the EU-UK GVC-trade patterns. Tariffs would add almost 1 percentage point to the cost of manufacturing inputs in the UK, while the corresponding input cost in the EU would be only marginally affected, despite some heterogeneity at the country-level.

Green Capital Accumulation: Business and Sustainability Management in a World of Global Value Chains

ABSTRACTTackling climate change and other environmental crises entails a critical reflection on processes and outcomes that are behind sustainability management by business. Sustainability has become a commodity itself, to be traded, bought, sold and managed like all others. How lead firms in global value chains (GVCs) address sustainability issues has become a key competitive element and a source of value creation and capture – facilitating a process of ‘green capital accumulation’. Sustainability management is emerging as a fourth key capitalist dynamic in addition to cost minimisation, flexibility and speed (Coe and Yeung 2015) – leading corporations to devise new spatial, organisational and technological ‘fixes’ to ensure continued capital accumulation. Public actors and civil society groups can address this situation, but their strategies need to be informed by the daily practices, power relations and governance structures of GVCs. Sustainability orchestration by these actors is more likely to succeed when: it employs appropriate combinations of directive and facilitative instruments that reinforce each other; improves issue visibility; provides incentives that facilitate the alignment of private and public sector interests; and leverages specific pressure points at key nodes of GVCs.

Trade and Worker Deskilling

This paper presents new evidence on international trade and worker outcomes. It examines a big world event that produced an unprecedentedly large shock to the UK exchange rate. In the 24 hours in June 2016 during which the UK electorate unexpectedly voted to leave the European Union, the value of sterling plummeted. It recorded the biggest depreciation that has occurred in any of the world's four major currencies since the collapse of Bretton Woods. Exploiting this variation, the paper studies the impact of trade on wages and worker training. Wages and training fell for workers employed in sectors where the intermediate import price rose by more as a consequence of the sterling depreciation. Calibrating the estimated wage elasticity with respect to intermediate import prices to theory uncovers evidence of a production complementarity between workers and intermediate imports. This provides new direct evidence that, in the modern world of global value chains, it is changes in the cost of intermediate imports that act as a driver of the impact of globalization on worker welfare. The episode studied and the findings add to widely expressed, growing concerns about poor productivity performance relating to skills and to patterns of real wage stagnation that are plaguing contemporary labour markets.

(Un)competitive Devaluations and Firm Dynamics

This paper studies monetary and exchange rate policy in a world of global value chains. Using recent microdata from Japan and Russia, devaluations are shown to negatively affect exporters in terms of employment, domestic revenue and profitability relative to nonexporting firms. Given their substantial dependence on imported intermediate inputs, exporting firms are more exposed to marginal cost shocks following exchange rate movements. Standard macro models are too simplistic in their microstructure to capture these transmission channels. I propose a New Keynesian general equilibrium model with firm heterogeneity, varying intermediate import intensities, and international dollar pricing to explain the findings. Strategic complementarities improve the quantitative performance of the model without changing its qualitative properties. The new paradigm is successful in matching key firm-level moments as well as the evolution of inflation and net exports.

Measuring Competitiveness in a World of Global Value Chains

All common real effective exchange rate indexes assume trade is only in final goods, despite the growing presence of global supply chains. Extending effective exchange rate indexes to include such intermediate goods can imply radically different effective exchange rate weights, depending on the relative substitutability of goods in final demand and in production. Unfortunately, the effect of these shifts in weights are difficult to identify empirically because the two currencies most affected—the dollar and the renminbi—have moved closely together. As the renminbi becomes more flexible, however, it will be important to determine which assumptions are the most realistic.

Measuring Competitiveness in a World of Global Value Chains

All common real effective exchange rate indexes assume trade is only in final goods, despite the growing presence of global supply chains. Extending effective exchange rate indexes to include such intermediate goods can imply radically different effective exchange rate weights, depending on the relative substitutability of goods in final demand and in production. Unfortunately, the effect of these shifts in weights are difficult to identify empirically because the two currencies most affected—the dollar and the renminbi—have moved closely together. As the renminbi becomes more flexible, however, it will be important to determine which assumptions are the most realistic.

Trade Costs and Borders in the World of Global Value Chains

There is a growing body of statistical evidence of the importance of value chains for the global economy. The perception of longer value chains with more border crossings raised concerns about multiple trade barriers and associated costs. In the existing literature, however, the investigations of the accumulation of trade costs through the multi-stage production rarely extended beyond illustrative examples. The likely reasons are poor data and technical difficulties inherent in the newly developed accounting methods that focus on value added flows irrespective of border crossings. This paper proposes two new approaches to quantify the accumulation of trade costs along global value chains and a measure of the average number of border crossings in value chains. These approaches build on the inter-country input-output accounting frameworks that trace gross trade flows backward to their initial origin or forward to their ultimate destination. Data from the World Input-Output Database are supplemented with estimates derived from the UN Comtrade and UN TRAINS, allowing for an experimental computation of the accumulated import tariffs faced by exporters in 2001, 2005 and 2010. At the aggregate country and sector levels, the accumulation of import tariffs is found to be pervasive but moderate. The average number of border crossings exhibits a slow upward trend, but the accumulated tariffs decline quickly. Trade liberalization therefore neutralizes the risk of higher cumulative protection associated with the international fragmentation of production. The findings suggest that the input-output accounting frameworks may significantly extend the frontier of trade policy analysis in the world of global value chains.

Labour in Global Production: Reflections on Coxian Insights in a World of Global Value Chains

This essay reflects on Robert W. Cox's work on global production, labour, and labour governance, and considers how his insights might illuminate the present conjuncture for labour in production. I work with an understanding of that conjuncture as involving the rise to pre-eminence of global production networks (GPNs) and global value chains (GVCs) as the contemporary expression of the ongoing globalization of production. The primary tasks of the essay are twofold: first, to explore the dynamics of labour and power in the GVC-based global economy, with a particular emphasis on labour exploitation; and second, to link these questions to those of the governance of the global economy, focusing on the shift towards transnational private governance as the dominant mode of contemporary governance, and on the evolving strategies of organized labour and the International Labour Organization in that context.

Input-Output Calculus of International Trade

Although significant progress has been made in capturing value added flows behind gross trade statistics, there is room for improving the computational and analytical foundations of the proposed frameworks. In pursuit of such improvements, this paper proposes a generalised framework for value added accounting and a new framework for gross exports accounting. It is shown that both frameworks can be modified to account for the cumulative or incremental trade costs in the world of global value chains. The proposed formulations are exposed to numerical tests with the data from the World Input-Output Database for 2010.

Aid for Trade in a World of Global Value Chains: Chain Power, the Distribution of Rents and Implications for the Form of Aid

Aid for Trade is widely heralded as a success in promoting increased trade by developing countries. Increased trade, however, does not automatically translate into greater prosperity for workers or local communities. In a world characterized by global value chains (GVCs) in which large lead firms typically enjoy considerable power over their suppliers, workers and small producers are often in a poor position to capture the economic gains produced by these chains. Profits (economic rents) typically accrue to the powerful. The policy implication is that the benefits of Aid for Trade, unless targeted at enhancing the capacities of workers and small producers, or at increasing their bargaining power, may disproportionately flow to those with power in the chain and not to the intended beneficiary.

Valuing Headquarters (HQS): Analysis of the Role, Value and Benefit of HQS in Global Value Chains

This report explores the growing importance of corporate headquarters in a world of global value chains. It examines the real and purported benefits of hosting corporate headquarters, and recent trends in location and operation of headquarters around the world and in Canada. It concludes with suggestions as to how governments may encourage headquarters to locate in Canada.Governments around the world are keen to attract headquarters to their jurisdictions for a variety of reasons. Because of the nature of the headquarters function, headquarters typically employ highly-skilled and well-compensated professionals. Headquarters also purchase high-end professional services, notably auditing, management consulting and financial services, as they pursue their corporate mandate. Individuals in these high-end professional services roles are highly coveted by governments as high-end tax payers and consumers within the localities where they work. Their positive economic impact is compounded by the fact that a variety of services jobs are seen to grow up around them, thereby generating significant indirect economic benefits to the localities in which they work. As an added benefit, high-end professionals are also seen as being individuals who are likely to invest substantial time and resources in community development, philanthropy and good works.